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Cement companies likely to invest for mt tonnes capacity
Between FY 2023 and 2027, cement industries are anticipated to go on an expansion binge and add 145-155 MT of capacity. On a high base, that amounts to a compound annual growth rate of 4%–5%. According to a note from Crisil, a strong 6-7% CAGR in demand is anticipated over these five fiscal years, which will promote supply development.
Large producers are currently concentrating on organic growth due to the robust demand outlook and acquisition of the majority of the smaller and financially weaker enterprises. Throughout the medium term, the top 5 will be responsible for the majority of incremental capacity expansion.
Strong profitability and a good post-pandemic demand rebound helped producers reduce their debt on the balance sheet. The pandemic forced the suspension or postponement of capex plans, which were resumed in the second half of fiscal 2021.
However, the agency anticipates that the capacity addition drive would slow down in fiscal 2023 and stabilise at 30-32 MT, including integrated and grinding units, since increased input costs have hurt their profitability and caused capex to decrease.
Moreover, fiscal 2024 appears unimpressive with only a 30-32 MT addition. That's because general elections could result in changes to policies.
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